Information technology has vastly changed the way businesses are conducted. Three interrelated changes that are evolved in the use of technology are the emerging mobile digital platform, the growth of online software, and the growth in “cloud computing” where business is conducted over the Internet. E-mail, online conferencing, and cell phones have now become necessary tools in conducting business. These changes have allowed businesses to now become a fully digital firm. They are able to sense and respond to their environments more quickly than traditional firms, giving them more flexibility to survive in turbulent times.
The use of information technology has become essential in the firm’s ability to achieve its strategic goals. Information systems are used today for a business to achieve six strategic business objectives: operational excellence; new products, services, and business models; customer and supplier intimacy; improved decision making; competitive advantage; and survival in today’s world.
An information system is defined as a set of interrelated components that collect (or retrieve), process, store, and distribute information to support decision making and control in an organization. It can also assist managers and workers in analyzing problems, visualizing complex subjects, and creating new products. Input, processing, and output produce the information needed by the managers and workers to accomplish these goals.
In order to fully understand information systems and use it effectively, knowledge of the broader organization, management, and information technology shaping the systems is needed. The organization portion involves issues such as the organization’s hierarchy, functional specialties, business processes, culture, and political interest groups. The management portion involves issues such as leadership, strategy, and management behavior. The technology portion consists of computer hardware, software, data management technology, and networking and telecommunications technology. Information systems are an important investment because it provides economic value to the business.
Some firms are able to achieve better results from their information system than others. Awareness of the organizational and managerial dimensions of information systems is where to focus as to why this is. Investing in information technology alone cannot make the organization more effective unless other complementary assets accompany them. These are assets that are required to derive value from a primary investment. They include new business models and business processes, supportive organizational culture and management behavior, appropriate technology standards, regulations, and laws.
Issues and insights contributed from technical and behavioral disciplines contribute to the study of information systems. The disciplines that contribute to the technical approach are computer science, management science, and operations research. The disciplines contributing to the behavioral approach include psychology, sociology, and economics. A sociotechnical view consists of the implementation of both the technical and social aspects and finding an optimal fit between them.